A tale of 2 employment surveys, at a glance

AP News

11/4/2011 6:42:55 PM - AP News

The economy gained only 80,000 net jobs in October, almost half September's gain of 158,000 and the fewest in four months. Yet the unemployment rate fell for the first time since July.

How did the rate fall with such a small job gain? It's because the government relies on two surveys for those figures, and they can diverge sharply from time to time.

One is called the payroll survey. It asks companies and government agencies how many people they employ. This survey produces the number of jobs gained or lost during the month. In October, the payroll survey showed that the private sector added 104,000 jobs, while federal, state and local governments cut 24,000.

The other is called the household survey. Government workers ask households about the employment status of adults living there. Those without jobs are asked whether they're looking for one. If they're not, they're no longer considered part of the work force and aren't counted as unemployed. The household survey produces the unemployment rate each month.

In October, the household survey painted a much rosier picture than its counterpart. It showed that the number of people who say they have a job jumped by 277,000, while the number of unemployed fell 95,000. That pushed the unemployment rate down to 9 percent.

The household survey captures farm workers, the self-employed, unpaid family workers and those who stayed home from work due to bad weather. They aren't included in the payroll survey. A big reason for October's rise was that self-employment jumped 200,000.

The household survey is also much more volatile from month to month. The Labor Department surveys 60,000 households, a small fraction of the more than 100 million households in the United States.

By contrast, the payroll survey is bigger. It seeks information from 140,000 companies and government agencies, which represent roughly one-third of all non-farm employees in the country. The employers send forms to the Labor Department with information about how many people are on their payrolls. They also provide data on wages, hours and other details.

While most Americans likely focus more on the unemployment rate, economists generally prefer the jobs figures from the payroll survey.

And economists note that the surveys tend to even out over time. In the past year, the payroll survey reports that employers added 1.5 million jobs, while the household survey found 1.7 million more people who said they found work.